Bitcoin Price Analysis March 9. 2016

This week, a wedge price structure fell sharply through $416 support to the downside, falling to a low $382. This was after trading in a $10 range, between $416 and $424. $382, an expected target on the downside has forced a retracement since March 6, correcting up to $416, now a resistance. Trades are settling at $409 on Bitstamp as of writing this.

This chart shows the current trader’s favorite unfolding pattern on BTC market. This symmetrical triangle wedge has been active since November’s 2015 $504 high. The lower and upper sloping trend lines are converging price to a high probability break out in the next 2-3 weeks. Price first bounced off $300 in November 2015, $352 2 months later on January 15, 2016. March 4th’s $382 low encountered resistance on the trendline, seen as a-b-c-d-e below.

On Elliott Wave charts, this structure is part of a high probability wave 4 retracement, ideally, a wave 5 break out to the upside should follow after support at e holds. $385 is an ideal target for (e), but an allowance for invalidation extends up to $352, C support.

“If the 352.50 level holds (preferably higher if it’s going to) then we get triangle completion, a thrust wave as high as 700 +/-”

Bitcoin has an uncanny resemblance to this week’s Gold triangle breakout, seen on this chart below, from Gold’s Rally A Study In Perfection, on Investing.com.

“Gold has staged a majestic upside breakout, as I predicted it would, from an important symmetrical triangle pattern.”

Whether Bitcoin breaks up or not will become clear over the coming weeks. Too many eyes on the same pattern and the opposite could happen.

“the fact that literally everyone and their mothers are tracking this triangle, and I would say there’s a good chance it doesn’t play out.”

There is a battle going on at $400, a level dating back to September – December 2014’s correction, seen below.

Bitcoin Fundamentals

Japan inches closer to BItcoin Regulation

Japanese regulators have in 2016, been discussing how to incorporate virtual currencies (VCs) into its regulatory framework. This week, the Economic Times reports a Bill has been approved to render VCc as

“asset-like values that can be used in making payments and be transferred digitally”

Cryptocurrency exchanges will fall under Financial Services Agency regulation, be subject to periodic external audits by CPAs and set aside 10 million YEN as minimum capital requirement.

The island currently considers bitcoins as an ‘object’, incurring an 8% consumption tax. Lawmakers say this hurts Japan’s competitiveness amongst the world’s industrialized nations. Tsukasa Akimoto, a Liberal Democratic, was quoted at a lower house budget committee meeting.

“Can’t you consider not imposing consumption tax on bitcoins in line with the international trend?”

Bitcoin Block size debate rages on, still no consensus

On the weekend of February 28th, the Satoshi Roundtable, a high profile meeting organized by Bruce Fenton, brought together bitcoin heavyweights to discuss the protocol. It is now emerging that little progress was made. Speaking via their personal blogs, Garvin Andresen, Brian Armstrong CEO Coinbase and BitPay’s Stephen Pair shared their experience at the roundtable.

Brian Armstrong insists a 2 MB increase is necessary in the short term, and went on to propose multiple competing teams besides core.

“the systemic risk to bitcoin if Bitcoin Core was the only team working on bitcoin.”

“If the block size limit is not increased, we will see more off-chain solutions. It is, however, a symptom of an unhealthy network that is becoming increasingly unreliable and vulnerable to attacks.”

Stephen dismissed any notion that the current divide had any impact on bitcoin’s long term prospects

“No decision, or lack thereof, regarding short term scaling matters is going to destroy Bitcoin. I am certain of that.”

Ex- Secretary of the US Treasury to Speak at Bitcoin Event

Finance Magnates reports Larry Summers and Glenn Hutchins, board member of Nasdaq, AT&T and the Federal Reserve Bank, are lined up to speak at Consensus 2016, the 2nd annual blockchain technology summit to be held in May, New York. both are bullish on the potential of Bitcoin to modern global payment systems.

Always a positive for bitcoin to be associated with some high profile mainstream finance folks.

Bitcoin Weekly Price Forecast

This coming week, i expect the price of bitcoin to have a go at breaking above $420, and then retrace to $400. A sideways trading range after a huge drop to cool off seems likely here. I am therefore neutral.

As seen above, $352 and $320 are the next stops going down. I see $352 as a high probability target after a week and half of oscillating around $400. A sharp sell off and an extended wick will work well to trigger stops and shake off weak bullish hopefuls.